Question

supply & demand worksheet

1. what does the law of demand state? a) as price rises, quantity demanded rises b) as price rises, quantity demanded falls c) as income rises, demand falls d) demand never changes
2. which of the following causes a movement along the demand curve? a) change in tastes b) change in income c) change in the goods own price d) change in population
3. a demand curve typically slopes: a) upward to the right b) downward to the right c) vertically d) horizontally
4. the law of supply states: a) higher prices decrease supply b) higher prices increase supply c) higher incomes increase supply d) lower costs increase demand
5. what does a supply curve show? a) the relationship between income and demand b) the relationship between price and quantity supplied c) the relationship between price and cost d) the relationship between utility and consumption
6. which of these is a determinant of demand? a) technology b) input costs c) consumer income d) number of producers
7. which of these is a determinant of supply? a) consumer preferences b) consumer income c) price of inputs d) price of substitutes
8. if two goods are substitutes, an increase in the price of one leads to: a) a decrease in demand for the other b) an increase in demand for the other c) no change in demand d) an increase in supply
9. which of the following is a complementary good? a) coffee and tea b) peanut butter and jelly c) shoes and hats d) pens and pencils
10. an increase in demand is shown as: a) a leftward shift of the demand curve b) a movement up the demand curve c) a rightward shift of the demand curve d) a downward movement along the demand curve
11. market equilibrium occurs where: a) supply > demand b) demand > supply c) quantity supplied = quantity demanded d) prices are lowest
12. if the price is above equilibrium, what results? a) shortage b) surplus c) disequilibrium d) inflation
13. if the price is below equilibrium, what results? a) shortage b) surplus c) inflation d) equilibrium
14. a rightward shift of the supply curve means: a) supply has increased b) supply has decreased c) demand has increased d) price has increased
15. a leftward shift of the demand curve means: a) demand has decreased b) demand has increased c) supply has increased d) supply has decreased
16. if both supply and demand increase, equilibrium quantity will: a) increase b) decrease c) stay the same d) be unpredictable without more information
17. a government - imposed price ceiling set below equilibrium causes: a) surplus b) shortage c) equilibrium d) higher supply
18. a government - imposed price floor set above equilibrium causes: a) surplus b) shortage c) equilibrium d) demand to increase

Explanation:

1. The law of demand states that as price rises, quantity demanded falls.
2. A change in a good's own price causes a movement along the demand curve.
3. A demand curve typically slopes downward to the right.
4. The law of supply states that higher prices increase supply.
5. A supply curve shows the relationship between price and quantity supplied.
6. Consumer income is a determinant of demand.
7. Price of inputs is a determinant of supply.
8. If two goods are substitutes, an increase in the price of one leads to an increase in demand for the other.
9. Peanut butter and jelly are complementary goods.
10. An increase in demand is shown as a rightward shift of the demand curve.
11. Market equilibrium occurs where quantity supplied = quantity demanded.
12. If the price is above equilibrium, a surplus results.
13. If the price is below equilibrium, a shortage results.
14. A rightward shift of the supply curve means supply has increased.
15. A leftward shift of the demand curve means demand has decreased.
16. If both supply and demand increase, equilibrium quantity will increase.
17. A government - imposed price ceiling set below equilibrium causes a shortage.
18. A government - imposed price floor set above equilibrium causes a surplus.

Answer:

1. B. As price rises, quantity demanded falls
2. C. Change in the good's own price
3. B. Downward to the right
4. B. Higher prices increase supply
5. B. The relationship between price and quantity supplied
6. C. Consumer income
7. D. Price of inputs
8. B. An increase in demand for the other
9. B. Peanut butter and jelly
10. C. A rightward shift of the demand curve
11. C. Quantity supplied = Quantity demanded
12. B. Surplus
13. A. Shortage
14. A. Supply has increased
15. A. Demand has decreased
16. A. Increase
17. B. Shortage
18. A. Surplus